Eurohold Bulgaria has announced that its reinsurance unit, EIG Re, will keep and protect the assets of Euroins Romania following an “abusive” and “irresponsible” withdrawal of its operating licence and request for the launch of bankruptcy proceedings by Romania’s financial regulator.
According to a report from SeeNews, Romania’s financial regulator has withdrawn the operating licence of Euroins Romania and has chosen to file a court request for the launch of bankruptcy proceedings.
The Romanian supervision authority, ASF, has appointed the Policyholders Guarantee Fund (FGA) as an interim administrator of Euroins, noting that FGA will manage the insurer’s activity until the appointment of a liquidator.
Eurohold Bulgaria has since released a statement condemning these actions, noting that it considers it to be a hostile takeover of the assets of its indirect Romanian subsidiary.
Further, it has announced that it will challenge the supervisor’s decision in all competent courts in Europe and around the world.
Eurohold statement reads, “In a new proof of irresponsibility, ASF, the institution that was not able to stop three bankruptcies in the insurance industry, failed this time to understand a reinsurance contract, throwing the RCA insurance market into a real disaster.”
The statement continues, “This decision confirms the intention to manipulate the insurance market and the premeditated nature of the supervisory institution’s actions, after approving in the last two months the participation of a prestigious bank such as the European Bank for Reconstruction and Development (EBRD) as a shareholder of Euroins and at the same time approving the capital subscription that demonstrates the solvency and stability financial position of Euroins, actions not found in the synthesis that is the basis of the ASF decision, which came before the Report requested by the EBRD and before the results of the EIOPA analysis.
“The management of Eurohold will start the procedure to challenge the decision for the bankruptcy proceedings.
“Eurohold’s and EIG Re’s management considers this measure abusive, absolutely irresponsible, especially in the current situation of the Romanian insurance market, and in contradiction with the good European practices.
“The abusive decision of the ASF board has provoked the activation of the Art. 26 in the reinsurance agreement signed by Euroins Romania and EIG Re, which provisions that in case of abusive actions and threats against the company from third parties, including abusive suspension or revocation of its license by the regulator, EIG Re has the right to withdraw from the contract with Euroins Romania and keep all written volume premium of the Romanian unit without any obligation towards the claims and risk related to the Romanian unit.
“Thus, ASF has provoked the termination of the reinsurance contract of Euroins Romania with EIG Re.
“As a result of potential abusive measures, the ASF board bears the full responsibility for all the negative consequences, including paying damages.”
In late February, Reinsurance News covered another SeeNews report that disclosed Eurohold Bulgaria had taken steps to guarantee the solvency of Euroins Romania, in turn shielding it from what it described as “regulatory overpressure”.
Euroins Romania signed a quota share reinsurance agreement with EIG Re, the reinsurance arm of EIG (EIG is a Eurohold subsidiary and the owner of Euroins Romania).
According to Eurohold, the deal provides a higher coverage of Euroins Romania’s minimum capital requirement and solvency capital requirement – the two key indicators of an insurer’s stability and solvency.
In addition, it covers the full amount of insurance claims of the Romanian company and resolves all outstanding issues constituting the dispute with the insurance supervisory authority in Romania.
Eurohold Bulgaria is a leading energy and financial services group active in Central, Eastern and Southeastern Europe, and is listed on the Bulgarian and Warsaw Stock Exchange.
EIG provides a full range of insurance products, serves over 4 million customers in 11 countries and has over 3,000 employees.
